Ever-Glory Reports Third Quarter 2022 Financial Results

Rhea-AI Summary

Ever-Glory International Group, Inc. (NASDAQ: EVK) reported Q3 2022 financial results, showing total sales of $106.4 million, up 12.7% year-over-year. The wholesale segment surged by 33.0% to $82.7 million, while retail sales fell 26.4% to $23.7 million. Gross profit dropped 30.9% to $16.0 million, with gross margin declining to 15.1%. The company reported a loss from operations of $6.1 million. As of September 30, 2022, cash reserves decreased to $32.2 million, with working capital of $41.6 million and bank loans of $63.4 million.

Positive

• Wholesale sales increased by 33.0% to $82.7 million.
• The focus on upgrading the customer portfolio supports long-term profitability.

Negative

• Retail sales decreased by 26.4% to $23.7 million.
• Total gross profit declined by 30.9% to $16.0 million.
• Loss from operations was $6.1 million, up from $0.7 million the previous year.
• Cash and cash equivalents decreased from $56.6 million to $32.2 million.

NANJING, China, Nov. 14, 2022 /PRNewswire/ -- Ever-Glory International Group, Inc. (the "Company" or "Ever-Glory") (NASDAQ: EVK), a retailer of branded fashion apparel and a leading global apparel supply chain solution provider, reported its financial results today for the third quarter ended September 30, 2022.

Mr. Yihua Kang, Chairman, President and Chief Executive Officer of Ever-Glory, said, "During the third quarter, we maintained our focus on developing the retail business through our multi-brand strategy and store network optimization initiative, while improving our wholesale business by upgrading customer portfolio and enhancing our account receivables."

"During the third quarter of 2022, our retail brands continue to attract new customers and retain existing customers by focusing on design, quality and value," Mr. Kang continued. "Following the remodeling or relocation of 29 stores during 2022, we operated a nationwide network of 774 stores as of September 30, 2022."

"Looking at our wholesale business, we maintained focus on upgrading customer portfolio to reduce credit risk and improve margin in light of weak micro-environment and enhancing our account receivables. Going forward, we'll implement a stricter client evaluation system and remain diligent in our account receivables collection. We believe the enduring strength of our wholesale business will support its long-term profitability," Mr. Kang concluded.

Mr. Jason Jiansong Wang, Chief Financial Officer of Ever-Glory, added, "The third quarter results are coupled with our ability to increase operating leverage. Going forward, we remain confidence in the long-term prospects of our business and we will continue implementing our margin enhancement and cost control measures to further strengthen the profitability of our business."

Third Quarter 2022 Financial Results 

Total sales for the third quarter of 2022 were $106.4 million, an increase of 12.7% from $94.4 million in the third quarter of 2021. This increase was primarily driven by a 33.0% increase in our wholesale business, partially offset by a 26.4% decrease in retail business.

Sales for the Company's wholesale division increased by 33.0% to $82.7 million for the third quarter of 2022, compared with $62.2 million for the third quarter of 2021. This increase was primarily attributable to increased sales in Mainland China, Hong Kong, the United Kingdom, and other European markets partially offset for decreased sales in Japan and the United States.

Sales for the Company's branded fashion apparel retail division decreased by 26.4% to $23.7 million for the third quarter of 2022, compared with $32.2 million for the third quarter of 2021. This decrease was primarily due to a decrease in same-store sales. The Company operated 774 retail stores as of September 30, 2022, compared with 893 retail stores as of September 30, 2021,.

Total gross profit for the third quarter of 2022 decreased by 30.9% to $16.0 million, compared with $23.2 million for the third quarter of 2021. Total gross margin for the third quarter of 2022 decreased to 15.1% from 24.6% for the third quarter of 2021.

Gross profit for the wholesale business increased by 2.4% to $10.5 million for the third quarter of 2022, compared with $10.2 million for the third quarter of 2021. Gross margin for the third quarter of 2022 decreased to 12.6% from 16.4% for the third quarter of 2021.

Gross profit for the retail business decreased by 57.0% to $6.0 million for the third quarter of 2022, compared with $13.0 million for the third quarter of 2021. Gross margin for the third quarter of 2022 was 23.6% compared to 40.3% for the third quarter of 2021.

Selling expenses for the third quarter of 2022 decreased by 11.4% to $12.8 million, or 12.0% of total sales, compared with $14.4 million, or 15.3% of total sales for the third quarter of 2020. The decrease was attributable to the decreased average salaries and decreased business trips.

General and administrative expenses for the third quarter of 2022 decreased by 1.7% to $9.3 million, or 8.7% of total sales, compared with $9.5 million, or 10.0% of total sales for the third quarter of 2021. The decrease was attributable to the decreased publicity expense and the depreciation of RMB.

Loss from operations was $6.1 million for the third quarter of 2022, compared to $0.7 million for the third quarter of 2021.

Balance Sheet 

As of September 30, 2022, Ever-Glory had approximately $32.2 million of cash and cash equivalents, compared with approximately $56.6 million as of December 31, 2021. Ever-Glory had working capital of approximately $41.6 million as of September 30, 2022, and outstanding bank loans of approximately $63.4 million as of September 30, 2022.

Conference Call

The Company will hold a conference call at 6:00 a.m. Eastern Time on November 14, 2022(7:00 p.m. Beijing Time on November 14, 2022). Listeners can access the conference call by dialing +1-877-704-4453 or +1-201-389-0920 and using the access code 13734457. The conference call will also be webcast live over the Internet and can be accessed at the Company's website at http://www.everglorygroup.com.

A replay of the call will be available from 9:00 a.m. Eastern Time on November 14 through 11:59 p.m. Eastern Time on November 21 by calling +1-844-512-2921 or +1-412-317-6671 with pin number 13734457.

About Ever-Glory International Group, Inc.

Based in Nanjing, China, Ever-Glory International Group, Inc. is a retailer of branded fashion apparel and a leading global apparel supply chain solution provider. Ever-Glory is the first Chinese apparel Company listed on the American Stock Exchange (now named as NYSE MKT) in July 2008 and then transferred to The NASDAQ Global Market on December 31, 2015. Ever-Glory offers apparel to woman in China under its own brands "La go go", "Velwin" and "idole". Ever-Glory is also a leading global apparel supply chain solution provider with a focus on middle-to-high end casual wear, outerwear, and sportswear brands. Ever-Glory services a number of well-known brands and retail stores by providing a complete set of supply chain management services, including: fabric development and design, sampling, sourcing, quality control, manufacturing, logistics, customs clearance and distribution.

Forward-Looking Statements

Certain statements in this release and other written or oral statements made by or on behalf of Ever-Glory International Group, Inc. (the "Company") are "forward looking statements" within the meaning of the federal securities laws. Statements regarding future events and developments and the Company's future performance, as well as management's expectations, beliefs, plans, estimates or projections relating to the future, are forward-looking statements within the meaning of these laws. The forward looking statements are subject to a number of risks and uncertainties including, without limitation, market acceptance of the Company's products and offerings, development and expansion of the Company's wholesale and retail operations, the Company's continued access to capital, currency exchange rate fluctuation and other risks and uncertainties. The actual results the Company achieves (including, without limitation, the results stemming from the future implementation of the Company's strategies and the revenue, net income and new retail store projections set forth herein) may differ materially from those contemplated by any forward-looking statements due to such risks and uncertainties (many of which are beyond the Company's control). These statements are based on management's current expectations and speak only as of the date of such statements. Readers should carefully review the risks and uncertainties described in the Company's latest Annual Report on Form 10-K and other documents that the Company files from time to time with the U.S. Securities and Exchange Commission. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
		September 30, 2022				December 31, 2021
ASSETS
CURRENT ASSETS
Cash and cash equivalents		$	32,177			$	56,573
Restricted cash			39,706				40,768
Trading securities			2,189				3,251
Accounts receivable, net			79,875				69,859
Inventories			49,038				63,841
Advances on inventory purchases			4,260				8,179
Value added tax receivable			2,144				1,693
Other receivables and prepaid expenses			6,049				6,345
Amounts due from related parties			-				220
Total Current Assets			215,438				250,729
NON-CURRENT ASSETS
Equity security investment			4,566				5,682
Intangible assets, net			4,211				4,794
Property and equipment, net			31,148				36,340
Operating lease right-of-use assets			38,905				50,077
Deferred tax assets			768				899
Other non-current assets			3,520				784
Total Non-Current Assets			83,118				98,576
TOTAL ASSETS		$	298,556			$	349,305
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Bank loans		$	63,360			$	68,992
Accounts payable			59,894				67,930
Accounts payable and other payables – related parties			2,907				1,332
Other payables and accrued liabilities			14,166				18,531
Value added and other taxes payable			842				999
Income tax payable			1,107				334
Current operating lease liabilities			31,538				41,633
Total Current Liabilities			173,814				199,751
Non-current operating lease liabilities			7,538				8,596
TOTAL LIABILITIES			181,352				208,347
COMMITMENTS AND CONTINGENCIES (Note 9)
STOCKHOLDERS' EQUITY
Common stock ($0.001 par value, authorized 50,000,000 shares, 14,818,006       and 14,655,926 issued and outstanding as of September 30, 2022,       respectively, 14,812,312 and 14,664,978 issued and outstanding as of       December 31, 2021, respectively)			15				15
Additional paid-in capital			3,670				3,660
Retained earnings			99,398				108,210
Statutory reserve			21,245				21,245
Treasury stock (at cost,162,080 and 147,334 shares at September 30, 2022       and December 31, 2021, respectively)			(400)				(363)
Accumulated other comprehensive (loss) income			(6,724)				8,191
Total Equity			117,204				140,958
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY		$	298,556			$	349,305

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
		Three months ended								Nine months ended
		September 30,								September 30,
		2022				2021				2022				2021
NET SALES		$	106,437			$	94,406			$	235,022			$	225,776
COST OF SALES			90,390				71,196				181,194				161,738
GROSS PROFIT			16,047				23,210				53,828				64,038
OPERATING EXPENSES
Selling expenses			12,792				14,443				38,153				44,495
General and administrative expenses			9,306				9,467				21,821				24,980
Total Operating Expenses			22,098				23,910				59,974				69,475
LOSS FROM OPERATIONS			(6,051)				(700)				(6,146)				(5,437)
OTHER (EXPENSES) INCOME
Interest income			22				176				299				928
Interest expense			(524)				(1,218)				(1,458)				(1,909)
Government subsidy			192				340				397				842
(Loss) gain from changes in fair values of investments			(915)				(123)				(1,587)				2,151
Other income			317				253				885				1,027
Total Other (Expenses) Income, Net			(908)				(572)				(1,464)				3,039
LOSS BEFORE INCOME TAX EXPENSE			(6,959)				(1,272)				(7,610)				(2,398)
Income tax benefit (expense)			835				(1,945)				(1,203)				(3,759)
NET LOSS		$	(6,124)			$	(3,217)			$	(8,813)			$	(6,157)
Foreign currency translation (loss) gain			(6,336)				(1,061)				(14,915)				1,020
COMPREHENSIVE LOSS		$	(12,460)				(4,278)			$	(23,728)			$	(5,137)
LOSS PER SHARE
Basic and diluted		$	(0.41)			$	(0.22)			$	(0.59)			$	(0.42)
Weighted average number of shares outstanding,       basic and diluted			14,817,053				14,811,073				14,815,077				14,810,585

 

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
		Common Stock					Additional						Retained Earnings						Accumulated			Amounts
																			other			due from
		Shares		Amount			paid-in			Treasury			Unrestricted			Statutory			comprehensive			related			Total equity
							capital			stock						reserve			income (loss)			party
Balance at     January 1, 2022		14,812,312		$	15		$	3,660		$	(363)		$	108,210		$	21,245		$	8,191		$	-		$	140,958
Stock issued     for compensation		2,042			-			5			-			-			-			-			-			5
Net loss		-			-			-			-			(5,089)			-			-			-			(5,089)
Repurchase of     14,746 shares of     common stock		-			-			-			(37)						-			-			-			(37)
Foreign currency     translation loss																				(836)						(836)
Balance at     March 31, 2022		14,814,354		$	15		$	3,665		$	(400)		$	103,121		$	21,245		$	7,355		$	-		$	135,001
Net income		-			-			-			-			2,400			-			-			-			2,400
Foreign currency     translation loss																				(7,743)						(7,743)
Balance at     June 30, 2022		14,814,354		$	15		$	3,665		$	(400)		$	105,521		$	21,245		$	(388)			-		$	129,658
Stock issued     for compensation		3,652			-			5			-			-			-			-			-			5
Net  loss		-			-			-			-			(6,123)			-			-			-			(6,123)
Foreign currency     translation loss																				(6,336)						(6,336)
Balance at     September 30, 2022		14,818,006		$	15		$	3,670		$	(400)		$	99,398		$	21,245		$	(6,724)		$	-		$	117,204
		Common Stock					Additional						Retained Earnings						Accumulated			Amounts
																			other			due from
		Shares		Amount			paid-in			Treasury			Unrestricted			Statutory			comprehensive			related			Total equity
							capital			stock						reserve			income			party
Balance at     January 1, 2021		14,809,160		$	15		$	3,650		$	-		$	109,171		$	20,376		$	4,590		$	(3,353)		$	134,449
Stock issued     for compensation		1,500			-			5			-			-			-			-			-			5
Net  loss		-			-			-			-			(1,170)			-			-			-			(1,170)
Net cash received     from related     party under     counter guarantee agreement		-			-			-			-			-			-			-			379			379
Foreign currency     translation adjustment																				(1,352)						(1,352)
Balance at     March 31, 2021		14,810,660		$	15		$	3,655		$	-		$	108,001		$	20,376		$	3,238		$	(2,974)		$	132,311
Net loss		-			-			-			-			(1,771)			-			-			-			(1,771)
Transfer to     reserve		-			-			-			-			-			-			-			-			-
Net cash     received from     related party under     counter guarantee     agreement		-			-			-			-			-			-			-			386			386
Foreign currency     translation adjustment																				3,434						3,434
Balance at     June 30, 2021		14,810,660		$	15		$	3,655		$	-		$	106,230		$	20,376		$	6,672		$	(2,588)		$	134,360
Stock issued for     compensation		1,652			-			5			-			-			-			-			-			5
Net  loss		-			-			-			-			(3,217)			-			-			-			(3,217)
Net cash received     from related party under     counter guarantee agreement		-			-			-			-			-			-			-			313			313
Foreign currency     translation adjustment																				(1,062)						(1,062)
Balance at     September 30, 2021		14,812,312		$	15		$	3,660		$	-		$	103,013		$	20,376		$	5,610		$	(2,275)		$	130,399

 

 

EVER-GLORY INTERNATIONAL GROUP, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands of U.S. Dollars, except share and per share data or otherwise stated)
		Nine Months Ended
		September 30, 2022				September 30, 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss		$	(8,813)				(6,157)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization			5,256				4,384
Loss from sale of property and equipment			141				590
Provision of bad debt allowance			3,943				676
Provision for obsolete inventories			5,296				842
Changes in fair value of trading securities			1,010				(200)
Changes in fair value of investments			577				(1,951)
Deferred income tax			42				644
Stock-based compensation			10				10
Changes in operating assets and liabilities
Accounts receivable			(20,334)				(8,614)
Inventories			4,353				(13,949)
Value added tax receivable			(671)				(1,235)
Other receivables and prepaid expenses			(434)				(1,096)
Advances on inventory purchases			3,317				586
Amounts due from related parties			211				(1,514)
Accounts payable			229				5,930
Accounts payable and other payables- related parties			1,779				(3,204)
Other payables and accrued liabilities			(5,124)				(3,332)
Value added and other taxes payable			891				(360)
Income tax payable			(81)				831
Net cash used in operating activities			(8,402)				(27,119)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment and intangible asset			(3,645)				(5,109)
Net proceeds from sale (purchase) of trading securities			52				(1,077)
Investment payment of other non-current assets			(3,028)				(773)
Net cash used in investing activities			(6,621)				(6,959)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from bank loans			56,018				56,110
Repayment of bank loans			(54,504)				(54,565)
Repurchase of common stock			(37)				-
Net collection of amounts due from related party (equity)			-				1,630
Net cash provided by financing activities			1,477				3,175
EFFECT OF EXCHANGE RATE CHANGES ON CASH			(11,912)				693
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH			(25,458)				(30,211)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT BEGINNING OF PERIOD			97,341				121,723
CASH, CASH EQUIVALENTS AND RESTRICTED CASH AT END OF PERIOD		$	71,883			$	91,512
Reconciliation of cash, cash equivalents and restricted cash reported within their     consolidated balance sheets:
Cash and Cash Equivalents			32,177				48,336
Restricted cash			39,706				43,176
		$	71,883			$	91,512
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	1,458			$	1,909
Income taxes		$	1,175			$	2,272
SUPPLEMENTAL SCHEDULE OF NON-CASH ACTIVITIES:
Common stock issued for compensation		$	10			$	10

 

 

 

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SOURCE EVER-GLORY INTERNATIONAL GROUP INC

FAQ

What were Ever-Glory's sales figures for Q3 2022?

Total sales for Q3 2022 were $106.4 million, a 12.7% increase from Q3 2021.

How did Ever-Glory's retail and wholesale sales perform in Q3 2022?

Wholesale sales increased 33.0% to $82.7 million, while retail sales decreased 26.4% to $23.7 million.

What was the gross profit for Ever-Glory in Q3 2022?

Gross profit for Q3 2022 was $16.0 million, a 30.9% decline from the previous year.

What is the loss from operations for Ever-Glory in Q3 2022?

The loss from operations was $6.1 million for Q3 2022.

What is the current cash position of Ever-Glory?

As of September 30, 2022, Ever-Glory had approximately $32.2 million in cash and cash equivalents.